AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 20, 2000
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
VASCO DATA SECURITY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-416320
(State or other jurisdiction of (I.R.S. Employer
incorporation or Identification No.)
organization)
------------------------------
1901 SOUTH MEYERS ROAD, SUITE 210
OAKBROOK TERRACE, ILLINOIS 60181
(630) 932-8844
(Address, including zip code, and telephone number, including
area code,
of registrant's principal executive offices)
------------------------------
MARIO R. HOUTHOOFT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VASCO DATA SECURITY INTERNATIONAL, INC.
1901 SOUTH MEYERS ROAD, SUITE 210
OAKBROOK TERRACE, ILLINOIS 60181
(630) 932-8844
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:
ROBERT B. MURPHY, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP
1200 NINETEENTH STREET, N.W.
WASHINGTON, DC 20036
(202)861-3900
------------------------------
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /X/
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
----------------------------------
CALCULATION OF REGISTRATION FEE
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Title of each Amount Proposed Proposed Amount of
Class of to be maximum maximum registration
Securities to registered* offering price aggregate fee
price per unit** offering
----------------------------------------------------------------------------------------------------------------
Common stock, par 4,561,855 $9.38 $42,790,199 $11,296.62
value $0.001 per share
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* Pursuant to Rule 429 under the Securities Act, the prospectus contained in
this Registration Statement is a combined prospectus and also relates to
(i) up to 6,418,595 options to purchase common stock and up to 6,418,595
shares of common stock underlying such options and (ii) up to 1,056,922
warrants to purchase common stock and up to 1,056,922 shares of common
stock underlying such warrants, which options, warrants and shares
of common stock were registered under Registration Statement No. 333-35563
previously filed with the SEC on Form S-4 and declared effective, and which
Registration Statement, pursuant to Rule 416, also covered such
indeterminate number of shares of common stock as may be issuable upon the
exercise of the options and/or warrants pursuant to anti-dilution
provisions thereof. This Registration Statement constitutes post-effective
Amendment No. 1 to Registration Statement No. 333-35563, which post
-effective amendment shall hereafter become effective concurrently with
the effectiveness of this Registration Statement and in accordance
with Section 8(c) of the Securities Act. Upon the effectiveness of
such post-effective amendment and this Registration Statement,
this Registration Statement will relate to an aggregate of 6,418,595
options to purchase common stock, 1,056,922 warrants to acquire shares of
common stock and 12,037,372 shares of common stock. The filing fee
associated with the 6,418,595 options, the 1,056,922 warrants and the
7,475,517 shares of common stock underlying such options and warrants under
Registration No. 333-35563 was paid at the time of filing of that
Registration Statement. Pursuant to Rule 416, this Registration Statement
also covers such indeterminate number of shares of common stock as may be
issuable upon the exercise of such warrants pursuant to anti-dilution
provisions thereof.
** Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) and under Rule 457(c) solely for the purpose of
calculating the registration fee, using the average of the high and low
prices as reported on the Nasdaq National Market on September 19, 2000 of
$9.38.
--------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER ___, 2000
[LOGO]
VASCO DATA SECURITY INTERNATIONAL, INC.
__________ SHARES OF COMMON STOCK,
________ WARRANTS TO PURCHASE SHARES OF COMMON STOCK
AND
_________ SHARES OF COMMON STOCK UNDERLYING THE WARRANTS
This prospectus relates to the public offering, which is not being
underwritten, from time to time, of up to ________ shares of common stock, par
value $.01 per share, and up to ______ warrants to purchase ______ shares of
common stock underlying warrants of VASCO Data Security International, Inc. by
various securityholders. We will not receive any of the proceeds from the sale
of these securities. The selling securityholders listed on page ___ may offer,
from time to time, those shares of our common stock and warrants under this
prospectus. The selling securityholders may offer and sell their shares of
common stock and warrants to or through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholders, the purchasers of the securities, or both.
Our common stock is traded on the Nasdaq National Market under the symbol
"VDSI." On September __, 2000, the closing price of one share of our common
stock was $00.00. Our common stock is also traded on the EASDAQ exchange under
the same trading symbol. The closing price on EASDAQ was _____ on September __,
2000.
------------------------
INVESTING IN OUR COMMON STOCK AND WARRANTS INVOLVES RISKS. YOU SHOULD
CAREFULLY READ AND CONSIDER THE "RISK FACTORS" SECTION OF THIS PROSPECTUS
BEGINNING ON PAGE __ BEFORE YOU MAKE YOUR INVESTMENT DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is September __, 2000
<PAGE>
TABLE OF CONTENTS
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PAGE
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Forward Looking Statements..............................................................
Summary.................................................................................
Use of Proceeds.........................................................................
Risk Factors............................................................................
Selling Securityholders.................................................................
Plan of Distribution....................................................................
Legal Matters...........................................................................
Experts.................................................................................
Where You Can Find More Information.....................................................
Incorporation by Reference..............................................................
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VASCO and VACMAN are registered trademarks in the United States. In addition
we have applied for registration of the Digipass trademark in the United States
and VACMAN Optimum in the Benelux countries.
FORWARD LOOKING STATEMENTS
Many statements made in this prospectus under the captions "Prospectus
Summary," "Risk Factors," and elsewhere are forward-looking statements that are
not based on historical facts. These forward-looking statements are usually
accompanied by words such as "believes," "anticipates," "plans," "intends,"
"expects" and similar expressions. Because these forward-looking statements
involve risks and uncertainties, there are important factors that could cause
actual results to differ materially from those expressed or implied by these
forward-looking statements, including those discussed under "Risk Factors."
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION ABOUT VASCO DATA SECURITY INTERNATIONAL,
INC. BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL THE INFORMATION YOU
SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK OR WARRANTS. YOU SHOULD
READ THIS ENTIRE PROSPECTUS CAREFULLY.
OUR COMPANY
We design, develop, market and support security products and services which
manage and protect against unauthorized access to computer systems of corporate
and government customers. Additionally, we enable secure financial transactions
made over private enterprise networks and public networks, such as the Internet.
We believe that our software and hardware products provide organizations with
strong, flexible and effective Internet and enterprise security solutions and
they compete favorably against those of our competitors.
Our IdentiSoft division primarily designs and markets products under the
Digipass brand. Our Digipass product line provides greater flexibility and a
more affordable means than competing products of authenticating users to any
network, including the Internet. The Digipass family of user authentication
devices, all of which incorporate an electronic digital signature capability to
guarantee the integrity of electronic transactions and data transmissions, are
commonly referred to as security tokens.
Our IntelliSoft division includes our SnareWorks and VACMAN software product
lines. Our SnareWorks product provides the security bridge between the existing
software infrastructure of legacy mainframe and client-server applications and
the world of the Web, including e-commerce and business-to- business on the
Internet.
Our principal executive offices are located at 1901 South Meyers Road, Suite
210, Oakbrook Terrace, Illinois 60181 and the telephone number at that address
is (630) 932-8844. Our principal offices in Europe are located at Koningin
Astridlaan 164, B-1780 Wemmel (Belgium) and the telephone number at that address
is 32(0)2/456.98.10. We maintain a website at www.vasco.com. The information
contained on our Web site does not constitute part of this prospectus.
USE OF PROCEEDS
All of the common stock and warrants offered by this prospectus are being
offered by our selling securityholders. We will not receive any of the proceeds
from the sale of our issued and outstanding common stock or warrants.
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED BELOW
BEFORE MAKING AN INVESTMENT DECISION. ANY OF THE FOLLOWING RISKS COULD ADVERSELY
AFFECT OUR BUSINESS, OUR COMPETITIVE POSITION AND FINANCIAL RESULTS. IN THAT
CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL
OR PART OF YOUR INVESTMENT.
WE HAVE A HISTORY OF OPERATING LOSSES AND A LARGE ACCUMULATED DEFICIT AND WE MAY
NEVER ACHIEVE OR SUSTAIN PROFITABILITY.
We may never be able to achieve or sustain profitability on an annual or
quarterly basis in the future. We have incurred operating losses of $4,167,622,
$1,326,655 and $892,957 for the years ended December 31, 1997, 1998 and 1999,
respectively, and we expect to incur operating losses for the foreseeable
future.
WE FACE SIGNIFICANT COMPETITION AND IF WE LOSE OR FAIL TO GAIN MARKET SHARE OUR
FINANCIAL RESULTS WILL SUFFER.
The market for computer and network security products is highly competitive.
Our competitors include organizations that provide computer and network security
products based upon approaches similar to and different from those which we
employ such as AXENT Technologies, Inc., RSA Security Inc. and Netegrity, Inc.
Many of our competitors have significantly greater financial, marketing,
technical and other competitive resources than we do. As a result, they may be
able to adapt more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and sale
of their products.
TECHNOLOGICAL CHANGES OCCUR RAPIDLY IN OUR INDUSTRY AND OUR DEVELOPMENT OF NEW
PRODUCTS IS CRITICAL TO MAINTAIN OUR REVENUES.
The introduction by our competitors of products embodying new technologies
and the emergence of new industry standards could render our existing products
obsolete and unmarketable. Our future revenue growth and operating profit will
depend in part upon our ability to enhance our current products and develop
innovative products to distinguish ourselves from the competition and to meet
customers' changing needs in the data security industry. We cannot assure you
that security-related product developments and technology innovations by others
will not adversely affect our competitive position or that we will be able to
successfully anticipate or adapt to changing technology, industry standards or
customer requirements on a timely basis.
THE SALES CYCLE FOR OUR PRODUCTS AND TECHNOLOGY IS LONG, AND WE MAY INCUR
SUBSTANTIAL EXPENSES FOR SALES THAT DO NOT OCCUR WHEN ANTICIPATED.
The sales cycle for our products, which is the period of time between the
identification of a potential customer and completion of the sale, is typically
lengthy and subject to a number of significant risks over which we have little
control. If revenue falls significantly below anticipated levels, our business
would be seriously harmed.
A typical sales cycle is often three to six months. Purchasing decisions for
our products and systems may be subject to delay due to many factors which are
not within our control, such as:
- the time required for a prospective customer to recognize the need for our
products;
- the significant expense of many data security products and network
systems;
- customers' internal budgeting processes; and
- internal procedures customers may require for the approval of large
purchases.
WE HAVE A SIGNIFICANT DEPENDENCE ON MAJOR CUSTOMERS AND LOSING ANY OF THESE
CUSTOMERS COULD RESULT IN A SIGNIFICANT LOSS IN REVENUES.
If we don't find other customers who generate significant future revenues,
the unforeseen loss of one or more of our major customers, or the inability to
maintain reasonable profit margins on sales to any of these customers, would
have a material adverse effect on our results of operations and financial
condition.
OUR SUCCESS DEPENDS ON ESTABLISHING AND MAINTAINING STRATEGIC RELATIONSHIPS WITH
OTHER COMPANIES TO DEVELOP, MARKET AND DISTRIBUTE OUR TECHNOLOGY AND PRODUCTS
AND, IN SOME CASES, TO INCORPORATE OUR TECHNOLOGY INTO THEIR PRODUCTS.
Part of our business strategy is to enter into strategic alliances and other
cooperative arrangements with other companies in our industry. We currently are
involved in cooperative efforts with respect to incorporation of our products
into products of others, research and development efforts, marketing efforts and
reseller arrangements. None of these relationships are exclusive, and some of
our strategic partners also have cooperative relationships with certain of our
competitors. If we are unable to enter cooperative arrangements in the future or
if we lose any of our current strategic or cooperative relationships, our
business could be harmed. We do not control the time and resources devoted to
such activities by parties with whom we have relationships. In addition, we may
not have the resources available to satisfy our commitments, which may adversely
affect these relationships. These relationships may not continue, may not be
commercially successful, or may require our expenditure of significant
financial, personnel and administrative resources from time to time. Further,
certain of our products and services compete with the products and services of
our strategic partners.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE AND OUR FAILURE TO OBTAIN CAPITAL
WOULD INTERFERE WITH OUR GROWTH STRATEGY.
Subsequent to June 30, 2000, we issued preferred stock and warrants to
purchase common stock resulting in $15.0 million in cash. At July 31, 2000, we
had $16.0 million in cash and $16.7 million in working capital. We believe that
our current cash balances together with cash generated from operations, will be
sufficient to fund our anticipated working capital needs, capital expenditures
and any potential future acquisitions for at least 12 months. Our current cash
balances are kept in short-term, investment-grade, interest -bearing securities
pending their use. In the event our plans or assumptions change or prove to be
inaccurate, or if we consummate any unplanned acquisitions of businesses or
assets, we may be required to seek additional sources of capital. Sources of
additional capital may include public and private equity and debt financings,
sales of nonstrategic assets and other financing arrangements. There can be no
assurance that we will have access to such capital.
Our ability to obtain financing will depend on a number of factors,
including market conditions, our operating performance and investor interest.
These factors may make the timing, amount, terms and conditions of any financing
unattractive. They may also result in our incurring additional indebtedness or
accepting stockholder dilution. If adequate funds are not available or are not
available on acceptable terms, we may have to forego strategic acquisitions or
investments, defer our product development activities, or delay the introduction
of new products.
WE DEPEND ON THE SERVICES OF OUR KEY PERSONNEL, ESPECIALLY MARIO R. HOUTHOOFT,
OUR CHIEF EXECUTIVE OFFICER, AND THE LOSS OF HIS SERVICES WOULD INTERFERE WITH
THE EXECUTION OF OUR STRATEGY.
The execution of our strategy depends in large part on the continued
services of our key personnel, especially Mario R. Houthooft, our chief
executive officer. Failure to execute our strategy would result in a loss of
marketshare to our competition and would result in lower operating results.
OUR FAILURE TO ATTRACT AND RETAIN HIGHLY SKILLED TECHNICAL PERSONNEL FOR OUR
RESEARCH AND DEVELOPMENT DEPARTMENT WOULD RESULT IN DELAYED INTRODUCTION OF
NEW OR MODIFIED PRODUCTS, LOSS OF CLIENTS AND MARKET SHARE AND REDUCTION IN
REVENUES.
The market for highly skilled technicians in Europe and the United States is
highly competitive. If we fail to attract, train, assimilate and retain
qualified technical personnel for our research and development department, we
will experience delays in introductions of new or modified products, loss of
clients and market share and a reduction in revenues.
WE ARE EXPERIENCING SIGNIFICANT GROWTH WHICH MAY PLACE A STRAIN ON OUR
RESOURCES.
We are experiencing a period of significant growth that has been placing a
significant strain on all of our resources. To manage future growth effectively,
we must enhance our financial and accounting systems and controls, further
develop our management information systems, integrate new personnel and manage
expanded operations. Our failure to manage our growth effectively could have a
material adverse effect on the quality of our products and services, our ability
to retain key personnel and our business, operating results and financial
condition.
WE FACE A NUMBER RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS, ANY OR ALL OF
WHICH COULD RESULT IN A DISRUPTION IN OUR BUSINESS AND A DECREASE IN OUR
REVENUES.
Our business internationally is subject to a number of risks any or all of
which could result in a disruption in our business and a decrease in our
revenues. These include:
- inconsistent regulations and unexpected changes in regulatory
requirements;
- difficulties and costs of staffing and managing international operations;
- potentially adverse tax consequences;
- wage and price controls;
- uncertain protection for intellectual property rights;
- imposition of trade barriers;
- differing technology standards;
- uncertain demand for electronic commerce;
- linguistic and cultural differences;
- political instability; and
- social unrest.
WE ARE SUBJECT TO FOREIGN EXCHANGE RISKS, AND IMPROPER MANAGEMENT OF THAT RISK
COULD RESULT IN LARGE CASH LOSSES.
Because a significant number of our principal customers are located outside
the United States, we expect that international sales will continue to generate
a significant portion of our total revenue.
We are subject to foreign exchange risks because the majority of our costs
and expenses are denominated in U.S. dollars, whereas a significant portion of
the sales of our European operating subsidiaries are denominated in various
foreign currencies. A decrease in the value of any of these foreign currencies
relative to the U.S. dollar could affect the profitability in U.S. dollars of
our products sold in these markets. We do not hold forward exchange contracts or
other hedging instruments to exchange foreign currencies for U.S. dollars to
offset currency rate fluctuations which might affect our obligations in relation
to our repayment from operations out of income from sales (which are principally
in foreign currency) of debt under our loan obligations (which are principally
in U.S. dollars).
WE HAVE A GREAT DEPENDENCE ON A LIMITED NUMBER OF SUPPLIERS AND THE LOSS OF
THEIR MANUFACTURING CAPABILITY COULD MATERIALLY IMPACT OUR OPERATIONS.
In the event that the supply of components or finished products is
interrupted or relations with either of our principal vendors is terminated,
there could be a considerable delay in finding suitable replacement sources to
manufacture our products at the same cost or at all. The majority of our
products are manufactured by two independent vendors headquartered in Hong Kong.
Each vendor assembles our security tokens at facilities in mainland China. The
importation of these products from China exposes us to the possibility of
product supply disruption and increased costs in the event of changes in the
policies of the Chinese government, political unrest or unstable economic
conditions in China or developments in the United States that are adverse to
trade, including enactment of protectionist legislation.
WE DEPEND SIGNIFICANTLY UPON OUR PROPRIETARY TECHNOLOGY AND INTELLECTUAL
PROPERTY AND THE FAILURE TO PROTECT OUR PROPRIETARY RIGHTS COULD REQUIRE US TO
REDESIGN OUR PRODUCTS OR REQUIRE US TO ENTER INTO ROYALTY OR LICENSING
AGREEMENTS, ANY OF WHICH COULD REDUCE REVENUE AND INCREASE OUR OPERATING
COSTS.
We currently rely on a combination of patent, copyright and trademark laws,
trade secrets, confidentiality agreements and contractual provisions to protect
our proprietary rights. We seek to protect our software, documentation and other
written materials under trade secret and copyright laws, which afford only
limited protection, and generally enter into confidentiality and nondisclosure
agreements with our employees and with key vendors and suppliers.
There has been substantial litigation in the technology industry regarding
intellectual property rights, and we may have to litigate to protect our
proprietary technology. We expect that companies in the computer and information
security market will increasingly be subject to infringement claims as the
number of products and competitors increases. Any such claims or litigation may
be time-consuming and costly, cause product shipment delays, require us to
redesign our products or require us to enter into royalty or licensing
agreements, any of which could reduce revenue and increase our operating costs.
OUR PATENTS MAY NOT PROVIDE US WITH COMPETITIVE ADVANTAGES.
We hold several patents in the United States and a corresponding patent in
some European countries, which cover multiple aspects of our technology. The
U.S. patents expire between 2003 and 2010 and the patent in those European
countries expires in 2008. There can be no assurance that we will continue to
develop proprietary products or technologies that are patentable, that any
issued patent will provide us with any competitive advantages or will not be
challenged by third parties, or that patents of others will not hinder our
competitive advantage.
WE ARE SUBJECT TO PRODUCT LIABILITY RISKS.
A malfunction of or design defect in our products which results in a breach
of a customer's data security could result in tort or warranty claims against
us. We do not presently maintain product liability insurance for these types of
claims.
THERE IS SIGNIFICANT GOVERNMENT REGULATION OF TECHNOLOGY EXPORTS AND TO THE
EXTENT WE CANNOT MEET THE REQUIREMENTS OF THE REGULATIONS WE MAY BE PROHIBITED
FROM EXPORTING SOME OF OUR PRODUCTS WHICH COULD NEGATIVELY IMPACT OUR
REVENUES.
Our international sales and operations are subject to risks such as the
imposition of government controls, new or changed export license requirements,
restrictions on the export of critical technology, trade restrictions and
changes in tariffs. If we become unable to obtain foreign regulatory approvals
on a timely basis our business in those countries would no longer exist and our
revenues would decrease dramatically.
Certain of our products are subject to export controls under U.S. law. The
list of products and countries for which export approval is required, and the
regulatory policies with respect thereto may be revised from time to time and
our inability to obtain required approvals under these regulations could
materially adversely affect our ability to make international sales. For
example, U.S. governmental controls on the export of encryption technology
require the issuance of licenses on a case-by-case basis for exports of
non-retail products to foreign governments, and prohibit exports to a list of
countries deemed to support terrorism, their nationals and other sanctioned
entities.
WE EMPLOY CRYPTOGRAPHIC TECHNOLOGY IN OUR AUTHENTICATION PRODUCTS THAT USES
COMPLEX MATHEMATICAL FORMULATIONS TO ESTABLISH NETWORK SECURITY SYSTEMS.
Many of our products are based on cryptographic technology. With
cryptographic technology, a user is given a key which is required to encrypt and
decode messages. The security afforded by this technology depends on the
integrity of a user's key and in part on the application of algorithms, which
are advanced mathematical factoring equations. These codes may eventually be
broken or become subject to government regulation regarding their use, which
would render our technology and products less effective. The occurrence of any
one of the following could result in a decline in demand for our technology and
products:
- any significant advance in techniques for attacking cryptographic systems,
including the development of an easy factoring method or faster, more
powerful computers;
- publicity of the successful decoding of cryptographic messages or the
misappropriation of keys; and
- increased government regulation limiting the use, scope or strength of
cryptography.
ANY ACQUISITIONS WE MAKE COULD DISRUPT OUR BUSINESS AND HARM OUR FINANCIAL
CONDITION.
We may make investments in complementary companies, products or
technologies. Should we do so, our failure to successfully manage future
acquisitions could seriously harm our operating results. In the event of any
future purchases, we will face additional financial and operational risks,
including:
- difficulty in assimilating the operations, technology and personnel of
acquired companies;
- disruption in our business because of the allocation of resources to
consummate these transactions and the diversion of management's attention
from our existing business;
- difficulty in retaining key technical and managerial personnel from
acquired companies;
- dilution of our stockholders, if we issue equity to fund these
transactions;
- assumption of operating losses, increased expenses and liabilities; and
- our relationships with existing employees, customers and business partners
may be weakened or terminated as a result of these transactions.
WE EXPERIENCE VARIATIONS IN QUARTERLY OPERATING RESULTS AND ARE SUBJECT TO
SEASONALITY, BOTH OF WHICH MAY RESULT IN A VOLATILE STOCK PRICE.
In the future, as in the past, our quarterly operating results may vary
significantly resulting in a volatile stock price. Factors affecting our
operating results include:
- the level of competition;
- the size, timing, cancellation or rescheduling of significant orders;
- new product announcements or introductions by current competitors;
- adoption of new technologies and standards;
- changes in pricing by current competitors;
- our ability to develop, introduce and market new products and product
enhancements on a timely basis, if at all;
- component costs and availability;
- our success in expanding our sales and marketing programs;
- foreign currency exchange rates; and
- general economic trends.
A SMALL GROUP OF PERSONS HAVE CONTROL OF A SUBSTANTIAL AMOUNT OF OUR COMMON
STOCK AND COULD DELAY OR PREVENT A CHANGE OF CONTROL.
Our Board of Directors and their immediate families will own beneficially
and of record approximately %, with Mr. T. Kendall Hunt and his wife owning
beneficially approximately %, of the outstanding shares of common stock. As the
Chairman of the Board of Directors and our largest shareholder, Mr. Hunt may
exercise substantial control over our future direction and operation and such
concentration of control may have the effect of discouraging, delaying or
preventing a change in control and may also have an adverse effect on the market
price of our common stock.
OUR STOCK PRICE MAY BE VOLATILE AND YOU MAY NOT BE ABLE TO RESELL YOUR SHARES AT
OR ABOVE ACCEPTABLE PRICES.
If an active public market for our common stock does not develop, the
liquidity of your investment may be limited, and our stock price may fluctuate
or decline below your expectations. The market price of our common stock may
fluctuate significantly in response to factors, some of which are beyond our
control, including the following:
- actual or anticipated fluctuations in our operating results;
- changes in market valuations of other technology companies;
- announcements by us or our competitors of significant technical
innovations, contracts, acquisitions, strategic partnerships, joint
ventures or capital commitments;
- additions or departures of key personnel;
- future sales of common stock;
- any deviations in net revenues or in losses from levels expected by
securities analysts; and
- trading volume fluctuations.
THE PRICE OF OUR COMMON STOCK MAY DECLINE DUE TO SALES OR THE APPEARANCE OF
SALES OF LARGE NUMBERS OF OUR SHARES.
Sales of substantial amounts of common stock in the public market or the
appearance that a large number of shares is or will be
available for sale, could cause the price for our common stock to decline.
WE HAVE NOT PAID AND DO NOT INTEND TO PAY DIVIDENDS.
We have not paid any dividends on our common stock, and we do not intend to
pay cash dividends in the foreseeable future.
CERTAIN PROVISIONS OF OUR CHARTER AND OF DELAWARE LAW MAKE A TAKEOVER OF OUR
COMPANY MORE DIFFICULT.
Our corporate charter and Delaware law contain provisions such as a class of
authorized but unissued preferred stock which may be issued by our Board without
stockholder approval that might enable our management to resist a takeover of
our company. Delaware law also limits business combinations with interested
stockholders. These provisions might discourage, delay or prevent a change in
our control or a change in our management. These provisions could also
discourage proxy contests, and make it more difficult for you and other
stockholders to elect directors and take other corporate actions. The existence
of these provisions could limit the price that investors might be willing to pay
in the future for shares of our common stock. See "Description of Capital Stock"
for more information.
FUTURE ISSUANCES OF BLANK CHECK PREFERRED STOCK MAY REDUCE VOTING POWER OF
COMMON STOCK AND MAY HAVE ANTI-TAKEOVER EFFECTS THAT COULD PREVENT A CHANGE IN
CONTROL.
Our corporate charter authorizes the issuance of 500,000 shares of preferred
stock with such designations, rights, powers and preferences as may be
determined from time to time by our board of directors. The board of directors
is empowered, without stockholder approval, to issue up to 500,000 shares of
preferred stock with such dividend, liquidation, conversion, voting or other
rights, powers and preferences as may be determined from time to time by the
Board. The issuance of preferred stock could adversely affect the voting power
or other rights of the holders of common stock. In addition, the authorized
shares of preferred stock and common stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control.
U.S. INVESTORS MAY HAVE DIFFICULTIES IN MAKING CLAIMS FOR ANY BREACH OF THEIR
RIGHTS AS HOLDERS OF SHARES BECAUSE SOME OF OUR ASSETS AND DIRECTORS AND
EXECUTIVES ARE NOT LOCATED IN THE UNITED STATES.
Several of our directors and executives are residents of Belgium, and a
substantial portion of our assets and those of some of our directors and
executives are located in Belgium. As a result, it may not be possible for
investors to effect service of process on those persons outside of Belgium, or
to enforce judgments against some of our directors and executives based upon the
securities or other laws of jurisdictions other than Belgium. Moreover, we
believe that under Belgian law there exist certain restrictions on the
enforceability in Belgium in original actions, or in actions of enforcement of
judgments rendered against us in courts outside jurisdictions that are a party
to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in
Civil and Commercial Matters (as amended). Actions for enforcement of such
judgments may be successful only if the Belgian court confirms the substantive
correctness of the judgment of such court, and is satisfied:
- that the judgment is not contrary to the principles of public policy in
Belgium or rules of Belgian public law,
- that the judgment did not violate the rights of the defendant,
- that the judgment is final under applicable law,
- that the court did not accept its jurisdiction solely on the basis of the
nationality of the plaintiff and
- as to the authenticity of the text of the judgment submitted to it.
Judgments rendered in the courts of parties to the Brussels Convention on
Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters (as
amended), will be enforceable by the courts of Belgium without reexamination of
the merits of the case provided such judgment is final and otherwise satisfies
all of the conditions provided for in this Convention. If proceedings have been
brought in one country, however, new proceedings in another country may be
barred.
SELLING SECURITYHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock held by the selling securityholders, the number of
shares being registered to permit sales from time to time by such selling
securityholders, and the total beneficial ownership of shares of our common
stock if all shares so registered should be sold by the selling securityholders.
This information is as of September __, 2000. Beneficial ownership is determined
by the rules of the SEC. To our knowledge, all shares are beneficially owned,
and sole voting and investment power is held by the person or entity named,
unless otherwise noted. This information assumes the sale of all shares listed
under "Common Stock to be Offered." It also assumes that none of the selling
securityholders will sell securities which are beneficially owned by them and
are not listed in such column or purchase or otherwise acquire additional shares
of our common stock or securities convertible into or exchangeable for our
common stock. The selling securityholders also are not under any obligation to
sell all or any portion of their common shares, nor are the selling
securityholders obligated to sell any of their common stock immediately under
this prospectus. This information may change from time to time, and, if
required, such information will be set forth in a supplement of supplements to
this prospectus.
Unless otherwise set forth below, none of the selling securityholders has,
or within the past three years has had, any position, office or material
relationship with us or our predecessors.
COMMON STOCK
COMMON STOCK COMMON STOCK TO BE OWNED
OWNED PRIOR TO TO AFTER THE
NAME AND ADDRESS THE OFFERING BE OFFERED(1) OFFERING(2)
NUMBER/PERCENT
---------------- -------------- -------------- --------------
-----------------------
(1) One or more supplements or post-effective amendments to this prospectus may
be filed pursuant to Rule 424, or otherwise, under the Securities Act to
describe any material arrangements for sale of the shares, if such
arrangements are entered into by any selling securityholders.
(2) Represents less than 1%, unless otherwise indicated.
<PAGE>
PLAN OF DISTRIBUTION
We are registering our securities on behalf of the selling securityholders.
Selling securityholders, as used in this prospectus, includes donees, pledgees,
transferees or other successors in interest who may receive securities received
from a named selling securityholder as a gift, partnership distribution or other
non-sale related transfer after the date of this prospectus. The selling
securityholders will act independently of VASCO in making decisions with respect
to the timing, manner and size of each sale. The selling securityholders may
offer their common stock and their warrants, including the shares of common
stock issuable upon the exercise of the warrants, in various amounts and at
various times in one or more of the following transactions;
- in ordinary broker's transactions on the Nasdaq National Market or any
national securities exchange on which our common stock may be listed at
the time of sale;
- in the over-the-counter market;
- in privately negotiated transactions other than in the over-the counter
market;
- in connection with short sales of other shares of our common stock in
which the securities are redelivered to close out positioning;
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options;
- pursuant to Rule 144; or
- in a combination of any of the above transactions.
The selling securityholders may sell their securities at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The selling securityholders may
use broker-dealers to sell their securities. If this happens, broker-dealers
will either receive discounts or commissions from the selling securityholders,
or they will receive commissions from purchasers of the securities for whom they
acted as agents. This compensation may exceed customary commissions.
The selling securityholders and the broker-dealers to or through whom sale
of the securities may be made could be deemed to be "underwriters" within the
meaning of the Securities Exchange Act of 1934, as amended, and their
commissions or discounts and other compensation received in connection with such
sales may be regarded as underwriters' compensation.
The anti-manipulation provisions of Rules 101 through 104 under Regulation M
of the Securities Exchange Act of 1934, as amended, may apply to purchases and
sales of common stock by the selling securityholders. In addition, there are
restrictions on market-making activities by persons engaged in the distribution
of the common stock.
None of the selling securityholders have advised us of any specific plans
for the distribution of the securities covered by this prospectus. When and if
we are notified by any of the selling securityholders that any material
arrangement has been entered into with a broker dealer or underwriter for the
sale of a material portion of the securities covered by this prospectus, a
prospectus supplement or post-effective amendment to the registration statement
will be filed setting forth:
- the name of the participating broker-dealer(s) or underwriters;
- the number of securities involved;
- the price or prices at which such securities were sold by the selling
securityholders;
- the commissions paid or discounts or concessions allowed by the selling
securityholders to such broker-dealers or underwriters; and
- other material information.
We have agreed to pay all costs relating to the registration of the
securities (other than fees and expenses, if any, of counsel or other advisors
to the selling securityholders). Any commissions or other fees payable to
broker-dealers in connection with any sale of the securities will be borne by
the selling securityholders or other party selling such security.
<PAGE>
LEGAL MATTERS
The validity of the securities offered will be passed upon for us by Piper
Marbury Rudnick & Wolfe LLP, Washington, D.C.
EXPERTS
The consolidated financial statements and schedule of VASCO Data Security
International, Inc. as of December 31, 1998 and 1999, and for each of the years
in the three-year period ended December 31, 1999 are incorporated by reference
in this registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934 as amended, and file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document we file, including the registration statement on Form S-3 of which this
prospectus is a part, at the SEC's public reference rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 New York, New York Suite 1400
Washington, D.C. 20549 Chicago, Illinois 60661
Our SEC filings are also available to the public from the SEC's Web site at
"http://www.sec.gov". The SEC's phone number is 1-800-SEC-0330. In addition, any
of our SEC filings may also be inspected and copied at the offices of The Nasdaq
Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Companies approved for trading on EASDAQ are required to publish relevant
financial and other information regularly and to keep the public informed of all
events likely to affect the market price of their securities. Price-sensitive
information is available to investors in Europe through the EASDAQ-Reuters
Regulatory Company Reporting System and other international information
providers. Investors who do not have direct access to such information should
ask their financial advisors for the terms on which such information will be
provided to them by these financial advisors. We will ensure that a summary of
our quarterly and annual financial statements will be provided to stockholders
in Europe across the EASDAQ Company Reporting System, or ECR System. A hard copy
of the annual report will be provided to stockholders promptly after it becomes
available. Complete quarterly statements will either be sent by us to our
stockholders or will be available upon request from the us at our executive
offices. Copies of all documents filed by us with EASDAQ are also available for
inspection at the offices of EASDAQ, 56 Rue de Colonies, Bte.15, B-1000
Brussels, Belgium.
INCORPORATION BY REFERENCE
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, as amended, with respect to the securities offered
hereby. This prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the registration statement.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
to those documents. The information incorporated by reference is considered to
be part of this prospectus, and the information that we file at a later date
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below as well as any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended:
- Our Annual Report, including all amendments thereto, on Form 10-K for the
year ended December 31, 1999.
- Our Quarterly Reports on Form 10-Q for the quarters ending March 31 and
June 30, 2000.
- The description of our Common Stock which is contained in the Company's
Registration Statement on Form S-4 (SEC File No. 333-00000) originally
filed on ______________.
We will provide a copy of the documents we incorporate by reference, at no
cost, to any person who receives this prospectus. You may request a copy of
these filings, by writing or telephoning us at the following address:
VASCO DATA SECURITY INTERNATIONAL, INC.
1901 SOUTH MEYERS ROAD, SUITE 210
OAKBROOK TERRACE, ILLINOIS 60181
(630) 932-8844
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. THE SELLING
SECURITYHOLDERS ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE
THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THE DOCUMENT.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
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ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
SEC Registration fee.................................................................... $11,296.62
Printing fee............................................................................
Accounting fees and expenses............................................................ $8,000.00
Legal fees and expenses.................................................................
Miscellaneous........................................................................... -------
Total $
</TABLE>
- ------------------------
* Estimated, except for SEC registration fee. No portion of these expenses
will be borne by the selling securityholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation may indemnify directors, officers, employees and agents against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement in connection with specified actions, suits, or proceedings whether
civil, criminal, administrative, or investigative (other than an action by or in
the right of the corporation--a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except that
indemnification is permitted only for expenses (including attorneys' fees)
incurred in connection with the defense or settlement of such action, and the
statute requires court approval before there can be any indemnification for
expenses where the person seeking indemnification has been found liable to the
corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, bylaws,
disinterested director vote, stockholder vote, agreement, or otherwise.
Article V of the Bylaws of Registrant provides that Registrant shall
indemnify and hold harmless, to the fullest extent permitted by applicable law
as it presently exists or may hereafter be amended, any person (an "Indemnitee")
who was or is made or is threatened to be made a party or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Registrant or, while a director or officer of the Registrant, is or was serving
at the written request of the Registrant as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or nonprofit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses (including
attorneys' fees) reasonably incurred by such Indemnitee. Notwithstanding the
preceding sentence, except as otherwise provided in Section 3 of Article V of
such Bylaws, the Registrant shall be required to indemnify an Indemnitee in
connection with a proceeding (or part thereof) commenced by such Indemnitee only
if the commencement of such proceeding (or part thereof) by the Indemnitee was
authorized by the Board of Directors.
<TABLE>
<S> <C>
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION
------ ------------------------------------------------------------
3.1* Restated Certificate of Incorporation
3.2* Bylaws
5.1**** Opinion of Piper Marbury Rudnick & Wolfe LLP
23.1**** Consent of KPMG LLP
23.2**** Consent of Piper Marbury Rudnick & Wolfe LLP (included in Exhibit 5.1)
24.1**** Power of Attorney (contained on signature page)
------------------------
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of this registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement, notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in the
registration statement; provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section
15(d)of the Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered hereby which remain unsold at the termination
of the offering.
(4) That, for the purpose of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oakbrook Terrace, State of Illinois, on this ____ day
of September 2000.
<TABLE>
<S> <C>
VASCO DATA SECURITY INTERNATIONAL, INC.
BY: /s/ Mario R. Hourhooft
---------------------------------
Mario R. Houthooft
President and Chief Executive Officer
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on September __, 2000:
SIGNATURE TITLE
--------- -----
/s/ Mario R. Hourhooft
-------------------------
Mario R. Houthooft President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ T. Kendall Hund
-------------------------
T. Kendall Hunt Chairman of the Board and Executive Vice President
(Principal Financial Officer)
-------------------------
Christian Dumolin Director
/s/ Michael P. Cullinane
-------------------------
Michael P. Cullinane Director
-------------------------
Pol Hauspie Director
/s/ Forrest D. Laidley
-------------------------
Forrest D. Laidley Director
/s/ Michael A. Milsine
-------------------------
Michael A. Mulshine Director
<PAGE>
